The ruling on exchanging used Gold that is pure for new Gold that has stones in it
Question :
There are some owners of gold shops who go to the gold merchant and take new gold from him that weighs one kilo, for example, and this gold will be mixed with stones. The stones may be precious stones that are called diamonds or zircons or other things. Then the buyer gives the merchant pure gold in return for this kilo, weight for weight. However, the pure gold does not contain any stones. Then, the seller will take an extra fee for this that is called the manufacturing fee. Thus, the seller will have two increases. The first is the increase of gold in return for the weight of stones, and the second is the increase of the manufacturing fee, because he is a gold merchant and not a manufacturer of gold. So, what is the ruling on this practice? May Allâh give you success.
Answer:
This practice is forbidden, because it contains Riba, and the Riba in it is from two aspects as the questioner mentioned. The first aspect is the increase in gold, as he makes what gold equal to stones and other things. This is similar to the necklace that was mentioned in the Hadith of Fadhalah bin 'Ubaid when he bought a necklace that contained gold and pearls for 12 dinars. Then, he separated it and found that it contained more (i.e., it was worth more than 12 dinars). So, the Prophet said:
"It should not be sold until its contents are considered separately."
In reference to the second increase, it is in the addition of the manufacturing fee. This is because the correct opinion is that the addition of the manufacturing fee is not permissible, because the manufacturing, even if it was from the work of man, but it is an increase in the description of something that is prone to Riba. This increase in the description resembles the increase in description which is from the creation of Allâh. Indeed the Prophet prohibited that a Sa' of good dates be purchased for two Sa's of lower quality dates. What is obligatory on the Muslim is to beware of Riba and avoid it, because it is of the greatest of sins.
Source:
Ash-Shaykh Ibn 'Uthaimin
Fatawa Islamiyah, Vol. 4 Pages 405-406
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